Differentiation, growth, and maintenance of epithelial cells are of fundamental importance to normal development and physiology of all multi-cellular organisms. Many of the same proteins that control proliferation and differentiation during embryonic development also contribute to the pathogenesis of disease. This proposal will focus on cell-cell signaling mechanisms that regulate the differentiation of epithelia and the patterning of com plex tissues with both epithelial and mesenchymal components. We have identified a new mouse gene, called KCP1, that encodes a protein with homology to regulators of the TGF-beta superfamily of secreted signaling peptides. KCPI is a large secreted protein with 19 repeated cysteine-rich domains, which may bind to the TGF-beta family of ligands directly. KCP1 is expressed in the developing kidney at both early and late stages and corresponds to the formation of epithelial structures within the intermediate mesoderm and to the formation of the proximal tubules in the more developed metanephric kidney. The pattern of expression and the amino-acid sequence suggest that KCPI may affect BMP or TGF-beta signaling, both of which are known to regulate epithelial differentiation and maturation in the kidney. We have also identified a Drosophila orthologue of KCP1 that is expressed in the early embryo and in epithelial derivatives during later embryogenesis. We will take a multi-faceted approach to understand the biological role of KCP1 in the mouse and in the fruit fly, Drosophila. Loss-of-function mouse mutants will determine the requirements for KCP1 in adult kidneys and in renal disease models. Gain-of-function experiments with both mouse KCP1 and the Drosophila cv-2 gene will address the biochemical mechanisms of action and enable us to place this gene into a signaling pathway. Together with in vitro assays designed to examine protein-protein interactions and downstream signaling, the function of KCP1 will be determined. Using the powerful genetic assays developed in the fly and biochemical and genetic tools from the mouse, this proposal will significantly impact our understanding of how BMP and TGF-beta signals are localized and regulated with respect to receptor interactions. The TGF-b signaling pathways are implicated in the initiation and progression of renal fibrosis a common pathological denominator in chronic renal disease. More recent evidence points to TGF-beta mediated transdifferentiation of renal epithelia to interstitial fibroblasts as an important component of disease progression. These studies will provide fundamental new insight into the biological functions of the TGF-beta family of secreted peptides in normal and diseased renal epithelia and thus provide the necessary mechanistic background for potential clinical applications.